Asian companies from Techtronic
Industries Co. to Maruti Suzuki India Ltd. said currency hedges
will help them withstand the impact of the euro’s slump after
stocks plunged on concern the region’s debt crisis will spread.

Techtronic, the maker of Hoover vacuum cleaners and Ryobi
power tools, fell 1.1 percent in Hong Kong trading today, while
Samsung Electronics Co. slid 0.1 percent in Seoul. PlayStation
maker Sony Corp. lost 3.4 percent yesterday in Tokyo, where
markets are closed today for a public holiday. The companies all
get more than 20 percent of their sales from Europe.

Maruti Suzuki, India’s biggest carmaker, earns up to 80
percent of its export revenue from Europe. The New Delhi-based
company had overseas sales of 48.6 billion rupees ($1.1 billion)
in the fiscal year ended in March.

“We are hedged for the next six months,” Chief Financial
Officer Ajay Seth said. “However, we will have to keep a watch
for the later part of the year.”

Cathay Pacific Airways Ltd., Hong Kong’s biggest carrier,
generated HK$7.9 billion of sales in Europe last year, or 12
percent of total revenue. About 20 percent of capacity in the
period was on European routes.

TPV Technology Ltd., the world’s biggest contract
manufacturer of computer screens, has European customers that
include Royal Philips Electronics NV. Less than 5 percent of
TPV’s sales are settled in euros, and the company has forward
currency contracts meant to protect against a fall in its value,
said Shane Tyau, director of corporate finance.

‘Very Thin Margins’

“Our biggest concern is on how the current situation may
affect end-user demand for our products,” Tyau said in Hong
Kong. “We operate on very thin margins, so we simply cannot
afford to take any undue risks on fluctuations in the forex
markets.”

Greece in January raised taxes on cigarettes and alcohol in
an effort to reduce what was the European Union’s biggest budget
deficit. Japan Tobacco Inc., the world’s third-largest publicly
traded cigarette maker, said the current crisis exacerbates its
problems.

Demand has “shrunk significantly in Greece” since the tax
increase, Japan Tobacco President Hiroshi Kimura said. The
company earned 46.5 percent of its revenue overseas in the year
ended March 2009.

Another Credit Crunch

“The situation in Greece has been severe,” Kimura said.
“Unless the Greek economy stabilizes, people would keep holding
off buying.”

The company said yesterday that annual profit will probably
drop 4 percent on Japanese plans to raise cigarette taxes.

The crisis may impact stock prices by curbing investors’
appetite for risk, according to Mitsushige Akino, who oversees
$450 million in assets at Ichiyoshi Investment Management Co. in
Tokyo.

“That limits the money going into the market, and share
prices won’t rise even with good company earnings,” Akino said.
“People may even need to pull funds out.

“It’s possible that this would create a credit crunch.”

Japanese automakers say moves in the euro are dwarfed by
changes in the U.S. dollar.

Toyota Motor Corp., Japan’s largest carmaker, expects each
1-yen gain against the euro to cut operating profit by 5 billion
yen ($536 million). That compares with the 35 billion-yen
reduction caused by the same move against the U.S. currency.

Sony, Nintendo

Honda Motor Co., Japan’s No. 2 carmaker, estimates that
such a move against the euro cuts operating profit by 1.5
billion yen, while a 1-yen move against the dollar cuts earnings
by 12 billion yen.

Spokesmen for both companies declined to comment.

Sony, the electronics maker that gets a quarter of sales
from Europe, loses about 7.5 billion yen of annual operating
profit for every 1-yen decline in the value of the euro,
spokesman George Boyd said.

The company “has no plan to take a specific action,” Boyd
said.

Nintendo Co., the world’s biggest maker of video-game
consoles, got about 41 percent of sales from Europe in the nine
months ended Dec. 31, making the region its biggest market. The
Kyoto, Japan-based company declined to comment on the impact.

Maruti Suzuki has a long-term strategy in Europe that will
survive any currency crisis, Seth said.

“Exchange rates will keep fluctuating up and down, but our
business model will continue,” he said. “We have about 15
percent of our sales from the export market. We will continue
with that.”